Little accountability for millions spent by federal party riding associations

OTTAWA – Riding associations for federal political parties are sitting on nearly $30 million of taxpayer-subsidized cash, with little obligation to account publicly for how the money is spent.

Annual financial reports filed recently with Elections Canada indicate that Conservative electoral district associations are by far the wealthiest, with combined surpluses of $18.3 million in 2012.

The richest of all is the Conservative association in Prime Minister Stephen Harper’s Calgary Southwest riding, which has amassed a war chest of more than $330,000 — the largest of any riding association, Conservative or otherwise, in the country’s 308 constituencies.

Liberal riding associations ended last year with combined surpluses totalling $6.3 million, while the NDP totalled $2.3 million.

Green Party riding associations were worth a combined $972,160, while those in the Bloc Quebecois were worth slightly over $1 million.

The eye-popping numbers suggest the days are long gone when riding associations consisted of a gaggle of volunteers who met periodically in someone’s basement to plan bake sales to raise a bit of cash.

Indeed, the financial reports suggest some of them — primarily the flush Conservative ridings — have morphed into sophisticated, perpetual campaign machines that rake in hundreds of thousands of dollars each year.

“We always encourage our (electoral district associations) to work hard, raise money and prepare for the next election,” says Conservative party spokesman Fred DeLorey.

“We have the strongest grassroots organization in Canada and it shows.”

However, exactly what the associations do with all that money remains something of a mystery.

Riding associations used to be known as the “black hole” of political financing in Canada. There was no legal requirement for them to publicly disclose the money they raised or how they spent it, except during the few short weeks of a federal election campaign.

Reforms to the Canada Elections Act in 2004 shone some light on the situation.

Associations that wish to issue tax receipts for donations must now register with Elections Canada and produce annual financial reports, which include full disclosure of the names of donors and the amounts they contributed.

Those reports also include financial statements that reveal any other sources of revenues, how much was spent in any given year and how much has been stockpiled over the long term.

But exactly what the money was spent on remains murky.

Associations report tens of thousands of dollars spent on things like “professional services,” “office expenses,” “travel and hospitality,” “fundraising activities,” “polling and research,” “salaries and benefits” or just “other” — with no detailed explanations.

Like political parties themselves, the associations, also known as EDAs, are not required to supply receipts to Elections Canada so the watchdog agency has no way of verifying whether the money was spent to stage a community outreach event or to buy the local MP a new car.

“We have no tools to do a basic audit,” said Elections Canada spokesman John Enright, noting that current and past chief electoral officers have urged Parliament to rectify the situation.

“You will see the flow (of money) entering the EDA and the flow exiting the EDA and that’s it.”

Riding associations must hire a certified auditor to sign off on their annual reports. The auditor has “the right” to demand access to receipts and other documentation and “may require” a financial agent to provide necessary information or explanations.

But how many auditors exercise their right to detailed documentation or explanations is unknown. At least one 2012 financial report, for former minister Peter Penashue’s Conservative riding association in Labrador, is only partially filled in and contains an obvious mathematical error, which evidently escaped the auditor in that case.

The Canadian Press did not receive any response to requests for explanations of some of the biggest spending Conservative ridings last year, including Finance Minister Jim Flaherty’s Whitby-Oshawa association.

Of all EDAs, it reported the highest spending on travel and hospitality ($69,323), the third highest office expenses ($30,853) and the second highest spending overall ($140,185).

Privately, some associations complain that the financial return form provided by Elections Canada forces them to slot spending under categories that don’t accurately reflect the nature of the expenses.

For instance, although many associations report tens of thousands of dollars spent on office expenses, it does not appear that any actually operates a full-time office to conduct their business.

The Liberal EDA in the Montreal riding of Bourassa, where Denis Coderre recently resigned in order to run for mayor, reported the fifth-highest office expenses of $26,305. But the association’s financial agent, Robert Richard, said that actually covered the production costs for a tribute video shown at an event last year celebrating Coderre’s 15 years as an MP.

Former interim Liberal leader Bob Rae’s Toronto Centre association reported the sixth highest office expenses of $19,610. But president Craig Knowles said “a considerable amount” of that was actually the cost of rented storage space for lawn signs and other campaign paraphernalia, along with print production costs, rental of meeting rooms and supplies for events.

In the prime minister’s Calgary riding, the Conservative association reported total revenues of $321,646 last year, with expenses totalling $89,874, including nearly $69,000 spent on fundraising activities. It reported long-term net assets of $331,268.

Compared to Harper’s cash-soaked riding association, the associations in NDP Leader Tom Mulcair’s Outremont riding and Liberal Leader Justin Trudeau’s Papineau riding are relative paupers.

Mulcair’s NDP association reported total revenues of $12,118 last year, total expenses of $7,381 and net long-term assets of $14,451.

The Papineau Liberal association missed the May 31 deadline for filing its 2012 annual report. Enright said it’s not unusual for EDAs to be granted extensions.

However, in 2011, Trudeau’s association reported total revenues of $87,383, total expenses of $154,614 and net long-term assets of $45,313. That was an election year so, not surprisingly, the association’s biggest expense was a $91,735 transfer of funds to Trudeau’s campaign.